How to Fix Your Credit for a Mortgage Loan

How to Fix Your Credit for a Mortgage Loan

One of the main reasons that people worry about their credit scores comes down to their ability to get a mortgage loan when it is time to buy a house. Obviously, that’s a major life milestone that people don’t want to see pushed back, so they want to try to do everything that they can to make sure that they know how to fix their credit for a mortgage loan.

The issue has been compounded in recent years by the economy’s struggles. On one hand, more and more people have had to file for bankruptcy or otherwise see their credit score plummet. At the same time, the related credit crisis has made lenders a lot more cautious. That means that it has gotten tougher from both ends, and it’s vital to monitor your credit and keep your score high.

For starters, I strongly recommend monitoring your credit report and credit score before applying for a mortgage so you know exactly where you stand. TransUnion has the best credit report monitoring in my opinion, plus they include your credit score for free.

If you find any inaccurate information, it is vital to dispute it so that you can get it remove as quickly as possible. However, don’t simply dispute the negative entries online. Rather, use my advanced credit dispute letter template.

In addition, if you have any late accounts or collections accounts it is important to attempt to remove the negative entries from your credit report. Read my posts on how to remove late payments from your credit report and how to remove collections from your credit report to get started.

If you plan to apply for a mortgage, make sure that you have at least six months of on-time payments on your credit report. That can push any late payments further down the report and make them less of a factor (if you’re unable to get them removed). Lenders know that people make mistakes from time to time, but if they are recent, it can be cause for concern.

A great way to build credit history fast is to get a secured credit card. The best thing about secured credit cards is that they provide you a way to build credit history even when your credit score isn’t high enough to be approved for a major credit card. You can read my secured credit card reviews to find a good card.

You also want to keep your overall debt as low as possible relative to your income and relative to your available credit. This shows that you are in complete control even if you are carrying some debt, and that you are a minimal risk for default. That’s one of the most important factors that you can put in your favor.